On January 1, 2017, Montgomery Inc. issued $200,000, 20-year, 5% bonds at 102. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2017, is:

Question 5 options:

debit cash, $250,000; debit premium on bonds payable, $5,000; credit bonds payable, $255,000.

debit cash, $252,500; credit bonds payable, $250,000, credit premium on bonds payable, $2,500

debit cash, $204,000; credit bonds payable, $200,000; credit premium on bonds payable, $4,000.

debit cash, $200,000; credit bonds payable, $200,000.